Property as sequential exchange: definition and language issues

Benito Arrunãda's paper on the transaction cost problems involved with land, provides an excellent explanation of land legal institutions. This explanation revolves around the fact that land exists through time, and that various exchanges made with respect to land at one time affect exchanges in other times. Arrunãda refers to this as ‘sequential exchange’, and he argues that sequential exchange provides the explanation for state involvement in titling and the default nature of in rem rights. Unfortunately, Arrunãda frames his argument with an inappropriate notion of transaction costs. This creates a confusing language, and a faulty interpretation of Coasean logic. Reframing the first sections of his paper using the ‘property rights’ definition of transaction costs brings brevity and clarity to the ultimate point he is trying to make.

Hodgson, G. (2015b), ‘What Humpty Dumpty might have said about property rights – and the need to put them back together again: a response to critics’, Journal of Institutional Economics, 11(4): 731–47.